tv Power Lunch CNBC January 2, 2013 1:00pm-2:00pm EST
all on thinkorswim from td ameritrade. ♪ welcome back. time now for final trades. the virtual doctor, start us off. >> thanks, john. elan, irish pharmaceutical company, fine notes. >> real quick, before we get the direction of the s&p right, get the second direction right first. berkshire hathaway. >> proshares. >> speedway motorsports. >> happy and healthy one to all of you. "power lunch" starts now.
>> same to you, scott. we start this hour with breaking news for only the fifth time in history. the dow is up triple digits on the first day of trade willing for the new year. let's see if it holds. hello and happy 2013 to everybody. happy 2013, if you are long the market today, i'm tyler mathisen. >> hey, ty. i'm becky quick. republicans don't love the fiscal cliff. democrats don't love this deal either but wall street does at least for today. why don't we look at where things stand right now. you will see the dow industrials are up by 223 point. s&p 500 up by about 24 and again these markets have been holding this throughout the day. nasdaq up by 66 points. gold up by $12.70 to 1,688 an ounce. yield is higher up, and let's go live to bob who is live on the new york stock exchange.
bob, happy new year. >> happy new year. er with near what traders called a 90% upside die. 90% of stocks on the upside and volume. take a look at what's been going on here. i will show you a lot of sectors at highs here. in some cases multiyear highs. historic highs for the russell 20000. also new highs in home building stocks. and sectorially financial stocks like bank stocks as well as materials also at 52-week highs. take a look at solar stocks. becky got a lot of questions about why are all of the solar stocks up so much today. there are tax breaks for renewable energy in the fiscal cliff year. specifically for wind and biodiesel, a lot of people are extrapolating and there will be cuts in subsidies. i know becky, what everyone will say on the headlines. stocks up on fiscal cliff deal. all i want to point out if you look at the numbers and stocks
have been up big on the first trading day the last four years, all i'm saying is that is probably the major factor here. back to you. >> i tell you, keep is here on the first day of trading. my true love gave to me a statistic that will blow your mind. listen to this, bob. here you go. if the s&p closes up double digits for the ppreceding year s negative like 2012 and if a left-handed oboe player is playing, the index is una hundred percent of the time in the following year with average gain of 12.5%. you got me there? it looks like we will be up 12.5%. he used to be an independent trader but is beginning a new deal with o'neill securities today. >> thank you very much. thank you very much. >> which means he will be with us. >> that is a good thing. >> as you forecast a look ahead to 2014, what kind of year do you expect? >> i think a better year.
economist, strategists are talking about how the economies around the world, we now have this partial deal on the fiscal cliff with more to come for sure but my sense is it just feels better. we might have a rough couple of months here but overall it is feeling better. >> it feels like we put a nickel against this deal and we got 95 cents more to pay. and three other big things to deal with. the sequester, debt limit and continuing resolution, basically funding. >> the debt limit and i think that's going to be the big worry in the next two months. but for the moment, remember the markets can go up and down on a dime these days and we will deal with these issues next. you can make a lot of money between new and then. >> one thing you have to say kenny is at least there is certainty as far as individual tax rates go. >> what is still left uncertain is what cuts are coming and who
gets hurt the most and so there is a lot of uncertainty. yes, certainty on the tax side, great. like you said, the rally is a relief but i also think the first day, new year, new money coming in. but i think you will get -- it is a a month this month. right to 1445 -- >> up 1.7% today, about the average we have seen in the last four years. >> thank you very much. >> becky, back to you. >> thank you, guys. we will go sector by sector, folks. seeing impact on stocks throughout the hour. starting things out with jackie deangelo. what are you seeing so far, jackie? >> happy new year, becky. >> thank you. >> there is more clarity when it comes to dividend taxation and that is good for markets. investors can expect the tax race to rise from 15 to 20% and that compared to the expectation that dividends could be taxed like ordinary income which could take the top rate over 40%.
in anticipation of the fiscal cliff, more than 250 companies either accelerated dividends or paid out special dividends val i'd at $38 billion. on average selling off 2% of 2012 according to morning star.com. generally analysts are saying they are confident that they are likely to see investment in dividend stocks in 2013 and income production investments over some of the less attractive alternatives out there. seeing big bounces today we are watching stocks like microsoft, chevron, china mobile, showing gains of more than 1%. pepsi j a& j. >> we have clarity on some issues. but before we get too carried away, this agreement did not address the issue of spending cuts and did not address the debt ceiling debate, instead only delayed the issues for the
next two months. steve, this brings us to the big question. everybody is looking at this. is this a big march madness fight. >> i know, i know. i was hoping we could pour a drink before this. folks, at home, pour it because you need it because you need it with this to say. while we technically hit it monday, we need a little breathing room. here is the story. there is a hundred billion dollars. extraordinary measures get it 200 billions. that delays the dawn of the debt ceiling by 2w0 two months. officials caution that this timeframe is highly variable. they are not officially putting a time table on how long they hold out before the treasury stops issuing debt. in 2011 the amount of treasury dealt grew by $195 billion in october and as little as 78 billion in july. you can see it is highly
variable. january pretty light month for issuance. february an march among the heaviest meaning the debt ceiling showdown could come sooner. on the other side it could help the treasury state under the limit, moves made last year, jackie was just talking about that. so the dividend stocks before the taxes come in to avoid this year's higher taxes could mean a windfall of tax receipts for the treasury and higher withhold be by wealthy people because of the tax hikes. should be more tax payments. bottom line, government is not better than weather forecasting, telling us what will happen. in 2011, they thought we would run out of money in july but turned out to be august. we will hit the cliff. and it sets up as becky projected for march fiscal madness. will had administration say, you know what, it offset by the hikes. the administration argue for new revenue in exchange for cuts? becky? >> one interesting question with this one mentioned maybe the
government revenue would be higher because of new taxes but with everybody moving those dividends up earlier with some things could it throw things off so you see lower revenue than expected in the first quarter? just from a tiny -- >> no, you have this windfall that will get you into -- remember that will come in this year. here is another interesting tid built. republicans will say, you know what, this tax deal we had raised the deficit by $4 trillion. the administration will say, you know what, it lowers the deficit by a -- >> with the starting point. >> one is an absolute, one uses the march 12 baseline. they are both right. >> tyler, back to you. >> thank you. wall street is watching washington closely and so are the ratings agencies. mary thompson has been calling big names all day long. mary, what you are finding? >> hey tyler. washington has been a focus of rating agencies for over a year
now, two years really and the small deal to raise taxes on upper income households will do nothing to soften that. strategists say two rating agencies could cut their rates. and if congress fails to reach an agreement on dealing with the country's long-term debt. keep in mind, u.s. cut its debt rating from double a to triple a a year ago august. another downgrade is likely. it will maintain the outlook if it doesn't stabilize the u.s. debt trajectory within three to five years. moody rates u.s. debt triple a but warns of downgrade this year if problem of long-term debt is not addressed as does fitch which earlier saw falling over fiscal cliff as biggest threat to u.s. and global economy. now its focus, should the u.s. fail to slow the growth of debt, it could likely result in the u.s. losing the triple a status
from fitch. u.s. debt to gdp is on track rise in excess of 90%. what strategies say they want it see is stabilize around current levels but that means spending cuts have to be put in place and the magic number in total of either total taxes or spending cuts is 4 trillion. so given the deal we struck yesterday is 600 to 700 billion there as a way to go. if there are additional down grades, will they have impact on the bond market? keep in mind it doesn't have much in mind when it lowered its rating in august. >> thank you very much. largely lost in all of the drama over the cliff, aid to victims to hurricane sandy on east koefd. it has republicans now turning on republicans. >> hi, tyler. kind after surprising and unexpected fight here.
let me show how as they were getting zun with the fiscal cliff debate. here is how it went down. >> the question is on the motion to adjourn. those in favor, say aye. >> aye. >> those opposed, no. >> no. >> and the opinion of the chair? ayes have it accordingly the house stands adjourned until 10:00 a.m. tomorrow for morning hour debate. >> so you could hear those republicans and democratic members from new york and new jersey upset they gavelled down the session last night before they voted on this bill and today, some of those members have been venting their anger at a system that they say is unfair to their constituents. take a listen. >> these people have no problem finding new york when it comes to raising money. it is only when it comes to
allocating money they can't find the ability to do it. we cannot believe that this cruel knife in the back was delivered to our region. >> this is is time to stop debating and take the gloves off, jersey style. democrats and republicanes from hard hit areas this afternoon, we know that new jersey governor chris christie will hold a press conference in about an hour's time to talk about how he feels about all of this. and the president of the united states is also weighed in from his trip to hawaii, urging now the house of representatives to vote on the sandy aid bill today before the new congress goes out of session. meanwhile, speaker boehner says it is one of his first priorities when the new congress comes in later in the week, tyler. actually up to you, becky. >> thank you. i guess we will get an earful from chris christie when he sounds off on this. we now have a deal in washington. this is a deal for now anyway.
maxine waters california democrat. she voted nor bill. jack kingston is georgia republican. he voted no. our next deadline is match. spending cuts are key. how do we get there from here? how do we do it without wring bringing the final system to the brink of collapse again? well have their answers right after the break. mine was earned off vietnam in 1968. over the south pacific in 1943. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection,
set at the last final moment, what are chances they can set prices in a timely manner. representative maxine waters is a democrat from california. she will be ranking member of the financial services committee. welcome to both of you representatives. thank you for joining us. congresswoman maxine waters, can we start with you and just ask you, at this point, we have been trying to figure out who won this battle and who lost? did anyone win? >> absolutely. our middle class american taxpayers won. with this agreement that the president signed, middle inkuks taxpayers in america won't have a tax increase. as matter of fact, they will have a permanent tax break and billion airs and millionaires of the country will have to pay their fair share. we did increase their tax rate. so if anybody won it was middle
class people who work everyday, raising their families, sending their kids to school, and just trying to have a descent quality of life. they absolutely won last evening. >> congressman kingston, you hear a plea like that, and it makes people wonder, why did you vote no? what was your vote process and what do you want to see happen next? >> remember this is two-step allegedly balanced approach that would have revenue increases and deficit reduction and yet cbo said for every $10 in revenue increase there is $1 in revenue or deficit reduction. so what we really did is punt for two months, sequestering. we will have another huge melt down, another round of washington hysteria surrounding the fiscal cliff. and to me, i don't think this is a good way to run the government, to run the country, run the economy, when we are fragile enough. we should have done everything at once. we should have had the senate act on our budget in the spring.
back in august when the house passed it and we should approach this, and i would say a same methodical thoughtful manner and not wait for two months to reenact this whole play all over again. >> congressman waters, tyler mathisen, welcome back. we were talking about what specific changes to medicare, if any, you could embrace by way of restraining the growth of spending there. and i'm not sure, in the heat of the discussion over taxes and so forth, that we got the answer. and i want to repose the question. do you acknowledge that we have to restrain the growth of spending in some of our retitlement -- entitlement programs and if you do acknowledge that, how would you do it? let me say what i think we really do have to acknowledge. there are the very priched and
very privileged in this country who do not pay their fair share of taxes and they take advantage of every loophole, every deduction and when we talk about, can we have the revenue to take care of the least of these, we have to look at what we can do. for example, what about carrying interest? what about transitional taxes? what about oil subsidies? what about looking in those areas? the defense budget. let us look where we can credibly get the kind of revenue to do what americans expect us to do for a descent quality of life before we talk about going to the least of these to bear this burden. let's talk about those who are getting away with corporate welfare. >> do i take your answer then to mean that you do not acknowledge that growth of titlement spending has anything to do with the debt situation we find ourselves in? and a second follow-up if i might, congressman, would you just implicitly from what you just said, would you favor for
example, raising the contribution that high income seniors pay for their medicare coverage? high income folks like me, and i'm going to be 65 in seven years, shouldn't i pay more for the same benefits that someone who is less able to pay gets? >> what i am saying to you is before we look at medicare, before we look at social security, before we look at medicaid, of course we should always do whatever we can do to get rid of fraud and abuse and all of that. but before we talk about eliminating any of the coverage and before we talk about separating those who can afford to pay a little more from those who campaign much, let's look in areas where we have the very rich and very privileged getting away with not bearing the burden of their responsibilities in
this country. that's what i'm saying. >> congressman kingston, you two are standing next to each other, but it sounds like you are still would w0r8ds worlds apart. will we take this to the brink again when we get to the sequestering meeting? >> i hope we don't. i know that one of the things that max even and i agree on is this is a process where it goes through her committee, through my committee, and each one of us has ideas to put on the table to avoid this. i think one of the complaints in both parties is this boiled down to a high level discussion between speaker boehner and the president. and we feel that you got 435 members of the house, a hundred members of the senate. if each of us work through regular order in sub committee, come up with ideas, i think we can fashion a better agreement and much better process and i think on the very sensitive things such as medicare, you could do that through the proper
sub committees and there are about five of jurisdiction and each one of us could come up with ideas like tort reform or end of life, living will type of arrangement. maybe some sort of deductible if you don't have one. there could be some things that i think would drive the discussion that could be very productive that would avoid this fiasco and high level drama we've had in the last couple of weeks. >> i absolutely agree with jack. i want the regular order of business. i don't support these super committees. i don't support two or three people in the back room making a deal. i don't support two or three people slipping things in that we don't know about. >> that requires time to go through the formal processes. are you both committing to right now saying that yes you will begin this process now? we've got two months. >> well we kick the can down the road for two months. >> but you will start right now, right? >> oh, absolutely. i do think that we should have the regular order of business and do the business with, you know, transparency so that people of this country can see
and understand what we are saying whob is saying what. i agree with jack on that. >> all right, folks. i'm sorry to have to interrupt you. we have to move along. i'm sure we will have you back. we appreciate your spirited point of view and thank you and happy new year to both of you. so now one sector you thought might be not on the rise today. defense stunk but that's not the case. jane wells, what's the story? >> tyler, turns out there's a difference between spending and funding. and nothing in defense may be more heavily fortfide than the big defense program. we will talk about it after the break. matters? at legalzoom, we've created a better place to handle your legal needs. maybe you have questions about incorporating a business you'd like to start. or questions about protecting your family with a will or living trust. and you'd like to find the right attorney to help guide you along, answer any questions and offer advice. with an "a" rating from the better business bureau legalzoom helps you get personalized and affordable legal protection. in most states, a legal plan attorney is available with every personalized document to answer any questions. get started at legalzoom.com today.
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welcome back, everybody. s&p 500 rising above the 50-day moving averages on the back of the fiscal cliff deal. take a look at some well above their 50-day. >> becky, we are also keeping an eye on defense stocks this day. fiscal cliff deal reached in washington does delay automatic spending cuts that had been set to hit the pentagon and hard. as you see there, the defense stocks moving a little bit higher today including northrop grumman and lockheed martin. in los angeles with a look at what the deal means at least for two months for the sector, hi jane. >> hi, tyler. kicking the drone down the road. including 55 billion for this year. people forget the pentagon
already has about 55 billion in cut in 2013 even without sequester. i know folks getting pink slips. but it is said all of these cuts are not cuts to spending but to funding. meaning the industry wouldn't start to feel it until next year. where? a lot of analyst don't expect cuts to impact multiyear contracts for hardware just because it is too difficult. pentagon just signed two deals with lockheed martin worth almost $9 billion for the f-35. so what is vulnerable? >> i think that the things that will be impacted will be things like training, maintenance, services, those are the shorter lead time items that the dod will be able to control. >> so companies providing those to the service include caci. sai pch booz allen.
in the meantime, they had a great year. bank of america merrill lynch says expect to bump short term guys. we are in defense spending which it says is the bottom for 34 years. >> if you just heard the comments from maxine waters you could expect more cuts as well. we go from guns to butter, so to speak. take a look at dean foods. stock is up more than 4% after that fiscal deal that averted a dairy cliff as well. also the potential doubling of milk prices. dean foods is up by 69 cents to 17.20 again. a gain of better than 4%. ty? >> becky, let's go up town and check in as nasdaq where we find seema mody following big movers there. hi, seema. >> hi, tyler. after congress averted the fiscal cliff, strong gains across the board. look at the nasdaq up around
2.4%. high end dividend stocks moving higher. the tax rate more or less stayed the same. cisco up nearly 3%. apple shares moving higher. there is a tech blog that says that apple is working on the iphone 6 as well as new operating system for the ipad and iphone. can you see the stock moving higher. that report helping speculative suppliers moving higher. take a look at nuance. mobile chip maker qualcomm also posting gains up nearly 4%. back to you. >> seema, thank you very much. gold prices closing down. tracking the action over at nymex, over to you. >> thank you. we are looking at $13 gain in the price of gold right around 1688 an ounce and it is near a two-week high right now. keep in mind as we have this fiscal cliff deal averted, the rally is not only if gold but in silver as well leading gains in the metals market up nearly 3%
and copper is getting a boost as well from positive manufacturing data out of china. hsbc purchasing managers. that number was the highest we have seen since may. new buying and etfs helping metals rally in the new year. back to you, becky. >> sharon, thank very much. folks, if you are still iffy on the market. there are other places to go as well. we will see how interest rates and commodities will be in washington that's right after this, "power lunch" will be right back. but i'm still "stubbed" up. [ male announcer ] truth is, nyquil doesn't unstuff your nose. what? [ male announcer ] it doesn't have a decongestant. no way. [ male announcer ] sorry. alka-seltzer plus fights your worst cold symptoms plus has a fast acting decongestant to relieve your stuffy nose. [ sighs ] thanks! [ male announcer ] you're welcome. that's the cold truth! [ male announcer ] alka-seltzer plus. ♪ oh what a relief it is! ♪ [ male announcer ] to learn more about the cold truth and save $1 visit alka-seltzer on facebook.
we're about half way through the hour of power. let's hear again from bob at the new york stock exchange. >> i think stocks are holding their gains midday. peopling saying, let's sell into the rally. there is a new mini cliff. a lot of new highs and i want it emphasize, the small cap index. there it is, iwm. there are historic highs and there is noteworthy achievement and home builders at new highs. not historic but multiyear financials and again you can buy those, there's the symbols there. you can ask about the retailers,
why they are all down. there is a sim answer. low end income people didn't avert a fiscal cliff. that will affect discretionary spending and also concern about the weather the at enof the year. kohl's had mark downs. i heard a deal that target had with neiman marcus and i heard that didn't do very well. >> i tried to do my best at nord nordstrom. >> i did my best. >> they are very loyal customers. >> they sell well on-line and in the store. thank you very much. >> to the bond market now. let's see how rick santelli and the bonds are. >> happy new year, tyler. the bond market is the same as equity. it jumped up on yields. fell in price. look at the 24-hour chart. boom. we open up eight basis points after closing at 176 and we have been in basic lay one basis
point range ever since. when you team it up with a one-day chart against the dow, you can see what's going on. the real question is, i understand bob is correct, we haven't really moved but we really haven't gained momentum in the equity trade so you want it watch this. the dollar index is up on the day. why? because the euro has fallen quite dramatically and the dollar add great day like every other currency. becky, back to you and happy new year. >> happy new year. >> if you are just coming out under your rock, a triple digit on the dow. yields on the ten-year also rising. still a lot of uncertainty ahead. how should you be positioning yourself or 2013? let's bring in our panel of expert traders. kenny is standing by at the nyse. richburg in chicago. and anthony at the nymes. kenny, why don't we start things off with you. you said you thought this would
be a good year for stocks. is that because you think the economy is looking strong or you can't fight the fed at this point? >> you can't fight the fed as we have seen the last three or four years. but it is not so much that economy is so strong, it feels to be stabilized. it feels to build a nice foundation. whether our economy or economies around the world. that is giving me optimism for the year. i do though think that first couple months actually might be fairly volatile. but in the end, if you stick with the plan, i think equities are poised to do well this year. >> i talked with jim o'neill and he was saying he thinks this could be the year that the u.s. actually loses its leadership edge when it comes to bull markets and things going on. he thinks you handed it off to other countries overseas at this point. are you worried at all about that? >> i'm not. jim o'neill speaks from a different point of view than i would. maybity right in the thick of it down here. i'm a big believe in america.
big believe in the markets. i have be a exposure to the markets like everybody does but i'm not ready to pass the mantle to somebody else. >> rich, we are talking about fighting the fed and what is bad idea that is. bonds are another market that people seem to not fight the fed but is this is the year that interest rates start higher? >> we don't know that. the fed is a huge elephant in the room and it is as long as they keep buying bonds, you don't have a problem. the thing that concerns me is that -- >> go ahead. >> the thing that concerns me is we borrow a trillion plus dollars a year, so if other members of the world decide ton buy our bonds, i don't think the fed can buy all of them. >> okay. so if you look at what's been happening though, you would bet that this year would be the year that we stay steady again? or just keep listening to the fed to see what they say? >> i think expectations are, we are going to stay steady.
that makes me nervous. when you have a wide consensus that everybody feels the same way, is when you get blind-sided. >> anthony, everybody seems to think that oil prices are going higher. that's two things. again, better economy bb but also the dollar dropping that makes oil prices go up. how are you playing this? >> one factor you left out is china showing 9% growth and demand for oil this november over last year and also their manufacturing is almost to the point where it was before they hit a recession. the real thing i like is gold and silver. i would like it buy both metals. we are still pretty money to no end. we still have some problems with the fiscal cliff as far as spending cuts and debt ceiling coupling up. >> all right, anthony, rich, kenny, gentlemen thank you and happy new year. tyler, back over to you. >> happy new year, everybody. facebook flying higher while
linkedin down today. >> with j.p. morgan raising price target and the overrate rating on confidence and william blair outperforming as facebook exchange ads are rapidly adopted with the potential to triple pricing. facebook's biggest bear bmo's daniel salmon did a 180 doubling price target to $32 upgrading from underperform to outperform, thanks to better tools. but linkedin, equal weight on concerns about valuation. linkedin did outperform pierce as well as the market last year. we ceil if facebook takes that role in 2013. back over to you. >> thank you, julia.
now to the deficit ceiling, or the debt ceiling, not deficit ceiling. so do you cut or is it really just slowing the growth. that's a definition of cut in washington terms. and investment versus salary. which faired better in the debt deal? the cliff deal. both editor robert frank is obt case. robert? >> the stocks aren't the only reasons investors are happy this afternoon. the cliff deal favors the wealthy who make their money from investments over the plane old salaried rich. we will have that coming up next. [ male announcer ] how can power consumption in china,
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playing the treacherous waters of 2013. it is an exclusive tomorrow on "power lunch." we will find out who they are, we will talk to them, if t is gangnam style. no, town hall style! >> you got my attention. especially the red carpet beforehand. now that washington is making a deal for the fiscal cliff, are you getting back into stocks? 25% say yes, big time. 45% say no. 18% say i prefer cash right now and 12% say, i'm investing, but not in stocks. next on on "street signs," mandy is here. >> you know, we have a deal, right? like it, hate it, at least we have one and we are going to rate it for you. also, the market seem it like the fact that we have a deal. how long is the really going to last? we will ask our expert and we
have a lot more work to do folks. we will get straight down to it and an all-star cast of life. you name it, we've got them. lot of things coming up on "street signs," top of the air. becky, ty, back to you on "power lunch." >> all right, mandy, thanks. we will see you in less than 16 minutes. any paycheck like a working stiff, cnbc's editor rob et frank is here. and i say that tongue in cheek, not every working stiff. snoo >> yeah, these are millionaire stiffes. they are not going up as much as some feared, especially for investors. we expected the top rate to go from 36.5% and it did. but only those making 400,000 or more or families making $450,000 or more. these folks will see their taxes go up about $20,000. those making more than a million
a year will see their taxes go up by about $120,000. that's an average. for people who make more of their money from investment, tax rates will remain much lower taxes on capital gains went to 20% from 15%. not bad. and the biggest winner, well, these are wealthy investors who make incan come from dividends. obama proposing taxing dividends at 39.6% from 15% currently. didn't happen. only went to 20%. despite the talk about the buffett rule and investors who pay lower taxes than the salaried rich, investment is still taxed at about half the rate as ordinary income as a result of this deal. that added healthcare tax, obama care tax as some call it, 3.8% on investment income, that remains and the real tax on investments is 23.will%. but that was going to happen regardless of the cliff. it did make one thing clear, and
that is that the tax system still rewards investors over the plain old working stiff wealthy. which is why we may see a strong market. >> thank you very much, appreciate it. >> thank you. >> tyler, back to you. >> is washington really ready to tackle spending cuts? they weren't apart of this deal? andy friedman, one of the country's foremost experts on taxes and all things washington, andy, welcome back opinion you were dead on in your analysis of of what would happen on the cliff. you said we would go over it for maybe a little while. it seems this is an exercise in part on where the political leverage lay. as we now turn to the spending part of the equation, it seems to me that the leverage is more on the side of the gop than the debate just closed. do you agree? >> absolutely. you stated quite correctly, tyler. >> before the president was playing in the home field, he
had all the cards. now we go to the republicans who got no spending cuts, but they deplanned those cuts as part of addressing the debt ceiling and sequestering an possible government shut down. so we move very decisively into the republican ballpark. >> i think that's a great metaphor. the president had the home field and now republicans are playing on their turf, it is their issue in way that raising taxes on the wealthy was the president's issue. so as we move closer to that new rub con, what do you think the outlines after deal could look like on that? president said on, i believe monday, that hey, you have another thing coming if you don't think more revenues will be part of this. >> that may be part of it. but i think it starts with the republicans saying, we have to cut spending. and we're not able to do it with discretionary spending. republicans won't accept cuts in
military spending. democrats won't accept cuts in social programs and that means entitlements are on the table. and i think we will see changes to entitlements. the use of growth race, social security change, cpi, maybe as we heard before, i think you mentioned it, more contributions for wealthy for mir medicare. maybe pushing back retirement age. but the president won't accept all of that without a change in taxes and an increase in trax rates is off the table so so we have to look at changes to deductions. >> andy friedman, i know we will talk to you a lot in the next couple weeks. >> thank you. same to you. >> brian, let's go to you. >> there are reports out there that chairman eric schmidt will head to north korea with a group led by former new mexico governor bill richardson.
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welcome back, everybody. time for a special power rundown. joining us is diana olic, bob and eric. coming back aces from washington, diana, what are they? >> that's right. congress did not touch the mortgage interest. number one on the mortgage interest deduction i have to say it is more emotional because to you do the math you will find the savings you get from refinancing to today's record low interest rates, which by the way are government induced, is probably more than the savings from mortgage interest deduction. still a big one emotionally and that's great. >> not only for homeowners but for realtors too. >> yes.
for realtors too. and tax relief for debt forgiveness is huge. ov over 98,000 short sales in q3 alone. modifications by big banks helped keep the housing recovery going. helped put a floor on home prices. if you had it pay taxes on that debt relief, people would stop accepting short sales, go right into foreclosure. plus the banks wouldn't be able to do the loan modifications. >> thanks you. up next, after the fiscal cliff storm, how is it going to fare? ? bob, what do you think? >> the banking index was 30%. that's because after the financial crisis becky, these banks got so beaten up that valuations weren't compelling. that's not necessarily a reason to by in 2013. do do we see in continuing low interest rates.
we haven't gotten half way through the dodd-frank. >> what is the timing on finding out the rest of the rules at this point, bob? >> they are still writing the rules. depending on who you read, they have only written 30 to 50% of regulations. i get different numbers all the time on this. >> i do too. >> part of the problem is figuring out exactly how far they are in this whole process. certainly some of the rules will come on line this year as well. i haven't even mentioned all of the down siding and trading going on for the big money center banks that will pressure them as well. >> an excellent point and you're right, it is hard it figure this out. what we want more than anything is clarity. >> phil let's check in with you. the impact the deal will have on the auto industry. >> not a huge impact. that because the auto sector is expected to come in next year between 15.3 and 15.5 million
vehicles in terms of annual sales. by the way, tomorrow we will get the final tally for all of 2012. that's going to come in at 14.5 million. the bottom line is this for the auto industry. continuing to see sales improve because of the economy improving and pint up demand. there are so many old vehicles, average age being more than ten years and it is forcing people to say, i need to go out and into the show room and with the slew of new vehicles rolling in, that's what's really fuelling the auto sales right now. if we had not seen a fiscal cliff deal, becky, there are some who believe you would have seen maybe 200 to 250,000 vehicle fall off the sales estimates. but wauz that deal is in place most say we will probably see a strong 2013. >> did sandy juice things ats the end of the year or is that a clean number, 14.5 rate? >> it juiced things a little bit but it is give and take. you lost in october. you are getting it back now. >> phil, thank you. tyler, we will send it back over to you. >> thanks, beck. next hour, mr. cramer, jim
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